A wide range of life insurance products is currently available in the insurance market, including various term life, ordinary life, whole life, and variable life insurance policies, which provide a variety of terms and benefits to suit the insurance and investment needs of consumers. However, life insurance providing death benefits for the unlikely event of simultaneous or coincident death of two or more insured parties as a single, stand-alone plan is not available. Life insurance currently available providing death benefits in the event of death of two insured parties includes coverage referred to as survivorship, joint last-to-die or second-to-die life insurance. Survivorship plans are typically provided for at least two people and pay benefits upon the failure of the two-person or joint status of the plan. Death of the second or last person is a failure of the joint status, triggering payment of death benefits.
Underwriting and management of survivorship plans requires insurance companies to determine cost-of-insurance rates based upon the characteristics of the insured parties comprising the joint status. Insurance companies must maintain up-to-date information on the insured parties with respect to their current survival status, which is particularly important in the event of death of the first of the two insured parties. The event of death of the first insured party may change the mortality and characteristics of the surviving second insured party. The costs associated with underwriting and managing survivorship plans, as well as the costs associated with marketing and selling insurance, comprise a substantial portion of the relatively high premiums survivorship plans command. Premiums are also affected by the relatively high limits of survivorship plans.
Although survivorship plans pay benefits upon the failure of the joint status as a consequence of simultaneous death, survivorship plans are not designed to address the unique financial implications associated with simultaneous or coincident death of two or more insured parties. Survivorship plans are not intended to provide benefits to cover the special financial needs of beneficiaries as a result of simultaneous death of two or more insured parties, particularly if insured parties are essential to the financial support or financial health of beneficiaries. Survivorship plans may be linked to additional benefits providing financial resources for the unique and special circumstances of simultaneous death. However, premiums for such additional coverage would not be affordable to a large majority of potentially insurable lives.